Weekly Economic Index: Naira Floating, Student

Kwame Malik

Global Courant

Nigeria introduces student loans.

Last Monday, President Bola Tinubu took office a bill introducing interest-free education loans for Nigerian persons interested in pursuing tertiary education.

The Access to Higher Education Act of 2023, also known as the Students Loan Act, establishes an Education Loan Fund to help Nigerians finance their higher education. Beneficiaries will begin paying in installments two years after completing their participation in the National Youth Service Corps (NYSC) program.

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Originally proposed in 2016 by Femi Gbajabiamila, the former Speaker of the House of Representatives, the bill was resubmitted in 2019 and received increased attention from the National Assembly in November 2022. While the initiative is commendable, it has sparked controversy among Nigerians, with many thinking the bill should be revised.

The Central Bank of Nigeria floats the Naira.

As part of President Bola Ahmed Tinubu’s commitment to implement monetary policy reforms, the Central Bank of Nigeria (CBN) recently introduced a clean float foreign exchange management system last Wednesday.

To be clear, the Naira’s free float means that the government or a monetary authority such as the CBN no longer sets the exchange rate. Instead, the exchange rate is determined by the dynamic interplay of market forces, especially the supply and demand of foreign currency at any given time.

Although the outcome is still uncertain, analysts expect the exchange rate movement to have several positive effects. These include reducing the disparity between official and parallel market exchange rates, increasing investor confidence, attracting higher foreign investment, lowering import costs and easing pressure on the Naira.

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President Ruto calls for de-dollarization.

Kenyan President William Ruto has urged African countries to stop relying on the US dollar for intracontinental trade, and instead consider using local currencies for buying and selling purposes.

President Ruto stressed that the African Export-Import Bank (Afreximbank) has introduced a mechanism that allows traders within the continent to trade with their respective local currencies.

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Ruto joins the growing list of voices from China, Russia, Brazil, India, the Association of Southeast Asian Nations (ASEAN), Saudi Arabia and the United Arab Emirates (UAE) clamoring for de-dollarization. If eventually achieved, this could facilitate the ease of doing business on the continent. This again brings up the African Union’s 31 year old idea for a single currency for Africa.

ICYMI: Market overview

The Nigerian Exchange Group opened trading on the exchange on Monday, May 12. The NGX All Share Index appreciated by 5.49% from last week and closed at 59,000.96.
The biggest winners were FTN Cocoa Processors Plc (45.16%), Unity Bank plc (41.67), Coronation Insurance Plc (40.43%), Transcorp Hotels Plc (37.35%) and Jaiz Bank Plc (30. 83%). The biggest fallers were The Initiates Plc (-25.00%), John Holt plc (-17.86%), Associated Bus Company Plc (-12.82%), Ellah Lakes Plc (-10.00%), CWG PLC (-10.00%).
The naira finished the week at $1 / ₦663.04 against the dollar on the Investors and exporters‘ window.
Brent rough ended the week at $76.61, while US West Texas Intermediate (WTI) Crude Oil closed at $71.78.
The global cryptocurrency market cap reached $1.07 trillion, at 3:35 p.m. on June 17, 2023. Bitcoin rose $26,489.26 (up 3.21% in 7 days), Ethereum was at $1,734.02 (down 0.60% in 7 days) and Binance coin was at $243.76 (up 3.24 % in 7 days).
Ezea wholesale marketplace for used and new electronics, has raised $3.7 million in seed funding to develop its technology infrastructure, broaden its product offerings and expand into new markets in Africa, Europe and South America.
Kenyan car marketplace peach cars has secured a $5 million seed round to grow its business, hire more talent and double down on R&D while expanding its tech solutions.
Maltaa company dedicated to unlocking the functional compounds of insect-based feeding solutions recently completed a $3.3 million capital raise.

Weekly Economic Index: Naira Floating, Student

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